Foxtel chief executive
Richard ­Freudenstein
has piled pressure on Communications Minister
Malcolm Turnbull
not to favour “subsidised" free-to-air companies over pay TV as the government prepares to propose historic reforms to deregulate the media industry.

Mr Freudenstein also told Fairfax Media he was “very surprised the ­minister is giving any credence" to the free-to-air networks’ calls for Foxtel to be forced to pay retransmission fees for showing their channels.

As revealed by Fairfax Media last week, Mr Turnbull wrote to Australia’s media chiefs and billionaire owners on June 12 saying he will consider Foxtel’s calls to shorten the politically sensitive anti-siphoning list of sports guaranteed for free-to-air TV. But Mr Turnbull pointedly added that “without consensus", no such reform of the list would be possible – highlighting the delicate balance between rival media groups that the Abbott government had to navigate.

His “consensus" comments sparked serious concern at Foxtel board level that it could lose out to the free-to-air commercial networks including market leaders
Seven West Media
and
Nine Entertainment
, who are fiercely protective of the anti-siphoning list.

It is understood Mr Freudenstein sought reassurances from the government last week after he got the letter.

“We would be very concerned if deregulation meant deregulation which favours the free-to-air networks but only deregulation which favours subscription TV if the free-to-air TV networks agree to it," he told Fairfax Media. “We are optimistic this is not what a deregulatory government would mean."

A spokesman for Mr Turnbull ­confirmed the minister’s comments about consensus related to the ­anti-siphoning list.

Industry consensus

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“We did want to reiterate that in that area particularly, the extent to which reforms are achievable will depend on industry consensus," the spokesman said. “That said it is also quite obvious that consensus will make reform more likely across the board."

The anti-siphoning list is unusually long by international standards due to the cultural significance and popularity of sport in Australia. It has suppressed Foxtel’s penetration of homes to just 30 per cent.

Foxtel, controlled by Rupert and Lachlan Murdoch’s
News Corporation
and
Telstra
, is Australia’s most profitable media company but it is struggling to grow premium ­subscribers.

Its historically high average revenues per user are also under pressure as it offers cheaper, web-based packages to counter increasing competition from cheaper rivals like Fetch TV.

Mr Freudenstein is particularly ­concerned Mr Turnbull is also ­prepared to entertain proposals by the free-to-air lobby that Foxtel should be forced to pay retransmission fees for showing the channels of the free-to-air networks.

Mr Turnbull’s letter indicated that he will consider such a scheme, saying: “Deregulation provides us with the opportunity to explore the ­implementation of an arrangement in which free-to-air and subscription broadcasters reach commercial arrangements that recognise the value of retransmission to each party."

Outrage

Mr Freudenstein is outraged by the idea. “I am very surprised he is even ­giving any credence to the FTA’s ­position on retransmission," he told Fairfax Media.

“By law we already pay a transmission fee to the underlying copyright holders of the signal."

The free-to-air lobby has pointed out that retransmission fees are paid by cable companies to TV networks in the US, arguing Australia is out of step with international practice.

Mr Freudenstein said: “But this is a very different regime to the rest of the world. In this country the free-to-airs have been subsidised and the ­government has invested in terrestrial coverage that reaches every Australian, so why should we have to pay a fine to provide these channels?

“Why should Foxtel customers pay for anything that everyone else gets for free?" he asked.

“We provide a great service for the free-to-airs for all their channels on the front page of our electronic ­programming guide so they get plenty of viewing in Foxtel homes, helping them to get more advertising.

“We are in favour of deregulation that should apply equally."

In his letter, Mr Turnbull spelled out a “deregulation roadmap" that could also include ripping up the rules that prevent television networks merging with their regional affiliates and ­newspaper companies from owning both television and radio assets in the same capital city.

News Corp, whose chairman
Rupert Murdoch
met Prime Minister
Tony Abbott
in New York this month, is in favour of such reforms. Rival billionaire
Kerry Stokes
, chairman of Seven West Media, has not backed them.